June 2006

E-Discovery and the Proposed Amendments to the Federal Rules of Civil Procedure: A Primer

by Robert A. Medved

The Digital Difference

There are at least three major differences between information that is stored electronically and information that is stored on paper: (1) electronically stored information is characterized by exponentially larger volumes than paper documents; (2) electronically stored information is dynamic and can unknowingly be changed or deleted; and (3) electronically stored information may become unintelligible when separated from the system that created it.1 These differences, along with a desire for national uniformity, provided much of the impetus for proposed amendments to Federal Rules of Civil Procedure (FRCP) 16, 26, 33, 34, 37 and 45 and revisions to Form 35 (E-Discovery Rule Amendments).2

Required Reading

The E-Discovery Rule Amendments were not created and should not be read or applied in a vacuum. The Zubulake v. UBS Warburg LLC decisions3 are essential reading about the discovery of electronically stored information. It has been said that "[m]ore than any other case, Zubulake v. UBS Warburg LLC has defined the electronic discovery battlefield, addressing key issues such as preservation, spoliation and cost-shifting."4 In Zubulake, Judge Shira Ann Scheindlin "set ground-breaking parameters for the production of electronic discovery, cost-shifting in such matters, and issues of appropriate sanctions for spoliation."5 Judge Scheindlin was a member of the Advisory Committee on Civil Rules that toiled more than five years crafting the E-Discovery Rule Amendments, and she acknowledged the E-Discovery Rule Amendments in Zubulake V.6

Thus, it seems wise to consider at least three of the Zubulake decisions as required reading for in-house and outside counsel.

Zubulake I provides guidelines on the threshold issue of whether a court will even consider shifting or allocating the costs of producing electronically stored information between the producing party and the requesting party, and creates a new seven-factor test that should be considered in conducting the cost-shifting analysis.7

Zubulake IV provides guidelines on the duty to preserve electronically stored information; when that duty arises; the individuals whose evidence must be preserved; the evidence that must be preserved; and the range of sanctions for spoliation, including an adverse inference instruction that may have an "in terroem effect" and "often ends litigation."8

Zubulake V grants plaintiff's request for an adverse inference instruction, partially faults "both in-house and outside" counsel,9 and provides the following guidelines to counsel regarding counsels' ongoing duties to preserve electronically stored information:

What must a lawyer do to make certain that relevant information — especially electronic information — is being retained?
***
First, counsel must issue a "litigation hold" at the outset of litigation or whenever litigation is reasonably anticipated.[10] The litigation hold should be periodically re-issued so that new employees are aware of it, and so that it is fresh in the minds of all employees.
Second, counsel should communicate directly with the "key players" in the litigation, i.e., the people identified in a party's initial disclosure and any subsequent supplementation thereto. Because these "key players" are the "employees likely to have relevant information," it is particularly important that the preservation duty be communicated clearly to them. As with the litigation hold, the key players should be periodically reminded that the preservation duty is still in place.
Finally, counsel should instruct all employees to produce electronic copies of their relevant active files. Counsel must also make sure that all backup media which the party is required to retain is identified and stored in a safe place.[11]

The E-Discovery Rule Amendments: An Overview

The Starting Point: Terminology

Originally, the Federal Rules of Civil Procedure only needed to address the discovery of "documents" and "things." The Federal Rules of Civil Procedure were amended in 1970 so the term "documents" would include "data compilations," and the amendments were interpreted to include information stored on a computer.

As technology advanced, electronically stored information became more dynamic and more difficult to shoehorn into the concept of a "document." The E-Discovery Rule Amendments address these advances by including the term "electronically stored information" throughout the pretrial and discovery provisions and Form 35 of the proposed Federal Rules of Civil Procedure.12 However, just as Justice Stewart declined to define the term "pornography" any more precisely than stating "I know it when I see it,"13 the E-Discovery Rule Amendments have declined to provide a precise definition of the term "electronically stored information" but intend the term to be "flexible enough to encompass future changes and developments."14

The First Procedures: Early Attention Directives

The E-Discovery Rule Amendments direct the parties to address electronically stored information discovery issues at the very outset of litigation.

As soon as practicable after a lawsuit is filed, the parties must meet to discuss any issues relating to the preservation of electronically stored information and to develop a discovery plan concerning any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced and any issues relating to claims of privilege or protection of trial-preparation materials. A report outlining how the discovery of electronically stored information should be handled must be submitted to the court within 14 days of the meeting. The parties must then provide to the other parties a copy or description of all electronically stored information that the disclosing party may use.15

The E-Discovery Rule Amendments also invite the court to include provisions for disclosure or discovery of electronically stored information and any agreements the parties reach for asserting claims of privilege or of protection as trial-preparation materials after production in its Scheduling Order.16

Proposed FRCP 26(b)(2)(B): Cost Shifting or Satellite Litigation?

The production of electronically stored information can in some instances be costly. It is not uncommon for the producing party to seek a court order to shift some or all of the cost of production to the requesting party. When determining whether to shift those costs, courts usually undertake a "cost-shifting" analysis.

Zubulake I is a seminal cost-shifting case and reasons as follows. Zubulake I first determines that "cost-shifting should be considered only when electronic discovery imposes an 'undue burden or expense' on the responding party." Zubulake I then determines that "whether production of documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format" and determines further that "[w]hether electronic data is accessible or inaccessible turns largely on the media on which it is stored." Zubulake I concludes by ordering that a "court should consider cost-shifting only when electronic data is relatively inaccessible" and then provides seven factors that should be considered in conducting the cost-shifting analysis.17

To some degree, proposed FRCP 26(b)(2)(B) codifies Zubulake I,18 with one major exception. In Zubulake I, if the requesting party is otherwise entitled to electronically stored information that is "relatively inaccessible" because of undue burden or cost, the producing party was still under an obligation to produce that information, and the only question for the court would be which party would be required to pay for the costs of production.19 Under proposed FRCP 26(b)(2)(B), however, if the requesting party is otherwise entitled to electronically stored information that is "not reasonably accessible because of undue burden or cost," the producing party "need not provide discovery" of that information.20

Proposed FRCP 26(b)(2)(B) has been characterized as a "legal Chernobyl,"21 and U.S. Magistrate Ronald J. Hedges advised that it would create "satellite litigation."22

Proposed FRCP 26(b)(2)(B) tees up that satellite litigation early by providing that a producing party "need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost." Then, absent agreement of the parties, if the requesting party wants the information that has been identified as being "not reasonably accessible," the court must determine the "not reasonably accessible" issue. Discovery to aid the court in its determination of the "not reasonably accessible" issue may likely be necessary.23 Then, assuming the producing party makes the "not reasonably accessible" showing, the court may still allow the discovery if the requesting party makes a showing of "good cause, considering the limitations of Rule 26(b)(2)(C)." Proposed FRCP 26(b)(2)(C) is, in essence, a cost-shifting analysis.24 Discovery to aid the court in its determination of the "good cause" and cost-shifting issues may likely be necessary.25

In addition to creating satellite litigation, proposed FRCP 26(b)(2)(B) creates at least two opportunities for gamesmanship. First, proposed FRCP 26(b)(2)(B) provides an incentive to move otherwise discoverable electronically stored information from an economically efficient storage system to an economically inefficient storage system and thus re-characterize that information from being "accessible" to being "not accessible."26 Magistrate Hedges observed as follows: "What will stop a corporate entity, after commencement of litigation, from making relevant data inaccessible? Why reward such a unilateral decision?"27 Second, proposed FRCP 26(b)(2)(B) provides an incentive for a producing party to abuse the ambiguities of the undefined term "good cause."28

Technological changes may one day render all electronically stored information readily accessible and proposed FRCP 26(b)(2)(B) unnecessary. Until that day arrives, however, it appears that proposed FRCP 26(b)(2)(B) will create satellite discovery and litigation of electronically stored information discovery issues29 and will create opportunities for gamesmanship.
 
Proposed FRCP 26(b)(B)(5): Privilege and Trial-Preparation Claims

Reviewing electronically stored information for privilege and trial-preparation materials can be expensive and increases the risk of waiver by the inadvertent production of privileged or trial preparation materials.30 The E-Discovery Rule Amendments address these issues in two ways. First, the E-Discovery Rule Amendments direct the parties to address potential privilege and trial-preparation issues at the very outset of the litigation.31 Second, proposed FRCP 26(b)(5)(B) provides procedures to assert a privilege or trial-preparation claim after privileged or trial-preparation materials are inadvertently produced.32

Proposed FRCP 33 and FRCP 34: The Discovery Workhorses

The E-Discovery Rule Amendments clarify the application of the "discovery workhorses," 33 FRCP 33 and FRCP 34, to electronically stored information.

Regarding interrogatories, proposed FRCP 33(d) leaves no doubt that in those instances when a party responds to an interrogatory by affording the other party an opportunity to inspect the business records of the responding party, the term "business records" includes "electronically stored information."

Regarding the production of documents, proposed FRCP 34(a) explicitly provides for the production of "electronically stored information," and proposed FRCP 34(b) provides clear rules regarding the form and manner in which electronically stored information is to be produced.

Proposed FRCP 37(f): A Safe Harbor or an Uncharted Minefield?

Proposed FRCP 37(f) addresses "the routine alteration and deletion of" electronically stored information that can occur automatically without an operator's direction or knowledge. These automatic alteration and deletion features arguably may result in an innocent party losing potentially discoverable information.

Proposed FRCP 37(f) seeks to protect such an innocent party by providing protection against sanctions "for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system."34 Although proposed FRCP 37(f) has been characterized as providing only "limited protection against sanctions,"35 it has also been characterized as providing a "safe harbor"36 against sanctions.

Regardless of how it is characterized, proposed FRCP 37(f) appears to have polarized the "reflexive"37 views of plaintiffs and defendants and appears to provide fertile grounds for discovery disputes. For example, in attempting to provide some guidance on what constitutes "good-faith," the Committee Note to proposed FRCP 37(f) elevates the "duty to preserve information" to the lofty status of being the linchpin of "good-faith," but then relegates a breach of the duty to preserve information to the lowly status of being one of "the factors that bear on a party's good faith in the routine operation of an information system" even in those instances where the source of the duty to preserve information is a court order.38 If the courts follow the Committee Note's guidance literally, this will be a dramatic departure from the current standard that an inadvertent or negligent breach of the duty to preserve triggers sanctions.39 There is also little guidance on what constitutes "exceptional circumstances" under proposed FRCP 37(f), other than that it "provides guidance in a troublesome area distinctive to electronic discovery," and that it "recognizes that in some circumstances a court should . . . protect . . . against serious prejudice." 40

In addition to discovery disputes, there is the consideration that the FRCP 37(f) "safe harbor" is perhaps not so safe. By its own terms, proposed FRCP 37(f) applies only to sanctions under the Federal Rules of Civil Procedure. It does not prevent a court from exercising its inherent power to sanction a party.41 One fairly recent sample of "all the written opinions in the sanctions arena since January 1, 2000," revealed that courts based their authority to impose sanctions on their inherent power in 28 percent of the sample cases, and, in 37 percent of the sample cases, "the court cited no authority whatsoever" upon which it based its authority to impose sanctions.42 Moreover, proposed FRCP 45 does not provide a "safe harbor" to a nonparty whose electronically stored information is subpoenaed in pending litigation.43

Magistrate Hedges described proposed FRCP 37(f) as an "uncharted minefield,"44 and one counsel expects that proposed FRCP 37(f) "is going to encourage the destruction of data."45 At the very least, it appears that the contours of proposed FRCP 37(f) will need to be determined judicially.

Missteps Can Be Costly

So how did all the pretrial electronic discovery issues mesh with the actual merits and trial of the Zubulake case? As noted above, the jury was given an adverse inference instruction as a result of the defendant's destruction of e-mails. At trial, the jury awarded the plaintiff approximately $9.1 million in compensatory damages and approximately $20.2 million in punitive damages.46

The Zubulake verdict is not all that aberrant. In Coleman v. Morgan Stanley,47 Morgan Stanley did not produce various documents, including some e-mails. As a result of Morgan Stanley's non-production, the court entered a partial default judgment on liability48 against Morgan Stanley. At trial, the jury awarded the plaintiff approximately $604.3 million in compensatory damages and approximately $850 million in punitive damages.49

Geographically closer to home is Magana v. Hyundai,50 a products-liability case where at the first trial in 2002, the jury awarded plaintiff approximately $8 million in damages. Hyundai appealed liability but not damages, and the case was remanded for a second trial on liability only.51 While preparing for the second trial in 2005, it became apparent that defendants had not fully responded to plaintiff's 2000 discovery requests for "all documents . . . relating to  . . . incidents of alleged seatback failure of Hyundai products . . . ," and plaintiff moved for an order to compel discovery. The trial court granted plaintiff's motion to compel and ordered the defendants to produce materials "with respect to all consumer complaints . . . involving allegations of seatback failure on all Hyundai vehicles . . . ." Shortly thereafter, and approximately six weeks prior to the second trial, Hyundai moved for partial relief from the court order requiring production of consumer complaints regarding seatback failures and requested "that it not be required to restore . . . 96 back-up tapes dating from August 1995." The bases of Hyundai's motion for relief were essentially: (1) that all of Hyundai's pre-January 2002 consumer complaints were archived on 96 back-up tapes; (2) that "[w]hile the data from the back-up tapes is viewable, [Hyundai could not] say with absolute certainty that it can be restored"; and (3) that "[assuming Hyundai was] able to restore and access the data stored on the tapes, the data must be converted which will require [Hyundai] to write new software program(s) to perform the conversion." Although Hyundai knew about the back-up tape issues before the 2002 first trial, Hyundai's 2005 motion for relief was the first time Hyundai disclosed those back-up tape issues to the trial court. It also appears that despite plaintiff's 2000 discovery requests, Hyundai did not search its computers until November 2005. In partial response to Hyundai's motion for relief, plaintiff filed two motions seeking various discovery sanctions, including the entry of an order of default against Hyundai on liability.52 Between November 21, 2005, and January 6, 2006, 10 days prior to the second trial, Hyundai produced information that disclosed approximately 35 alleged incidents of seatback failure, 28 of which occurred before the first trial in 2000.53 In ruling on the various discovery motions, the trial court, among other things, faulted Hyundai's in-house and outside counsel, held that "[i]t was the duty of Hyundai to establish an adequate system to respond to discovery requests," found multiple discovery violations, found the discovery violations were willful, and granted plaintiff's motion for default.54 The following excerpt from the trial court's oral ruling is instructive:

Hyundai knew that the seat back claim was a critical issues [sic] in the case. Hyundai had the obligation not only to diligently and in good faith respond to discovery efforts, but to maintain a system that would enable them to respond to these claims.
***
Hyundai knew that there had been customer complaints, that it had received a number of such complaints…. It was the duty of Hyundai to establish an adequate system to respond to discovery requests. Hyundai failed to establish such a system and failed to respond accurately to discovery requests. Hyundai failed to supplement those answers when it became known that they were incorrect.

I find that the violations were willful as defined in the law. In fact, compared to some of the violations that are seen in the cases before the Court, in terms of a direct misrepresentation — not a misleading representation, but a directly false representation that these violations were egregious.55

Monetary sanctions can also be harsh in an appropriate case. In United States v. Philip Morris,56 a defendant continued to delete e-mails despite its own document-retention program. The court imposed a monetary sanction of $2.75 million and precluded all individuals who failed to comply with the defendant's document-retention program from being called at trial as fact or expert witnesses.

The lesson of Zubulake, Morgan Stanley, Hyundai, and Philip Morris appears to be that the incompetence or intentional mishandling of electronically stored information during discovery can be costly.

All Counsel Should Become Familiar With the Legal Landscape

If you are assuming that you need not be concerned with the discovery of electronically stored information or the E-Discovery Rule Amendments since you do not litigate in federal court, or do not represent large clients, or do not represent high-tech clients, or do not litigate big cases, or do not practice intellectual property law, you may want to rethink that assumption in light of the following:

• E-mail evidence surfaces in most areas of state law including attorney discipline, collections, contracts, defamation, discrimination, employment, environmental, industrial insurance, labor, land use, marital dissolutions, municipal, parentage, and wages. 57
• The Judicial Conference Committee recognized that the "burdens of such [electronic] discovery also affect small organizations and even individual litigants."58
• Zubulake I stated the inescapable fact that litigation "involving the discovery of electronic data . . . in today's world — includes virtually all cases."59
• Zubulake itself was not a "big" case. Judge Scheindlin described Zubulake as "a relatively routine employment discrimination dispute."60
• The days when counsel might have "sometimes agreed not to poke around" each other's electronically stored information are gone.61 If those days ever did exist, Arthur Andersen and Enron should have put the last nail in their coffin.62
• Courts are becoming more critical of counsel's performance regarding the discovery of electronically stored information.63
• Courts are becoming less accepting of human incompetence or technical problems as explanations for noncompliance with discovery requests or orders regarding electronically stored information.64

Conclusion

The E-Discovery Rule Amendments provide guidance for dealing with the issues raised by the discovery of electronically stored information. To the extent the E-Discovery Rule Amendments may not be perfect, the courts should not tolerate any attempt to exploit those imperfections. While most counsel will not have the luxury of becoming electronically stored information experts or specialists, all counsel should gain enough familiarity with the issues presented by electronically stored information to enable them to recognize those issues when they arise. 

Robert A. Medved graduated from the Seattle University School of Law, cum laude, and was editor-in-chief of the Law Review. After law school, he clerked for Judge Jesse W. Curtis, U.S. District Court, Central District of California. Mr. Medved is co-chair of the Intellectual Property Committee for the Federal Bar Association, Western District of Washington. His private law practice includes nearly 30 years of experience in commercial and real estate transactions and in federal and state court litigation. In 2000 and 2001, he served as the interim general counsel for @Link Networks, Inc., a competitive local exchange carrier then based in Boulder, Colorado. Mr. Medved can be reached at 206-232-5800 or bob@ramedved.com. 

NOTES
 
1. See Report of the Judicial Conference Committee on Rules of Practice and Procedure (Judicial Conference Committee) to the Chief Justice of the United States and Members of the Judicial Conference of the United States, at Rules-Page 22 and 23 (September 2005) (Judicial Conference Committee Report), available at http://www.uscourts.gov/rules/Reports/ST09-2005.pdf.

2.  The E-Discovery Rule Amendments become effective on December 1, 2006, unless the U.S. Congress intervenes.

3. See Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) (Zubulake I) (addressed "cost-shifting"); Zubulake v. UBS Warburg LLC, 230 F.R.D. 290 (S.D.N.Y. 2003) (Zubulake II) (addressed release of confidential deposition transcripts); Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (Zubulake III) (allocated backup tape restoration costs); Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (Zubulake IV) (addressed the preservation of evidence, spoliation, and sanctions); Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (Zubulake V) (granted sanctions and imposed an adverse inference instruction against UBS); and Zubulake v. UBS Warburg LLC, 382 F. Supp. 2d 536, 547 (S.D.N.Y. 2005) (Zubulake VI) (ruled on the parties' motions in limine).

4.  Zubulake Rules: New Realities in E-Discovery — Lessons Learned and Practical Applications (February 25, 2005), www.fiosinc.com/events/webcast_archive_2005.html.

 5.  "UBS Must Pay $29.3 Million In Damages," www.pglewis.com/presscenter_Article.asp?id=86&type=2.

 6.  See Zubulake V, 229 F.R.D. at 440.

 7.  See Zubulake I, 217 F.R.D. at 317-320.

 8.  See Zubulake IV, 220 F.R.D. at 216-222 (italics in the original).

 9.  See Zubulake V, 229 F.R.D. at 424, 433-437, 439-440. See also infra note 63.

 10. Courts usually require the suspension of routine document retention/destruction policies, which is sometimes referred to as a "litigation hold." See, e.g., cases cited infra note 39.

 11. Zubulake V, 229 F.R.D at 433-434 (italics in the original; footnote added).
 
12. The term "electronically stored information" appears in proposed FRCP 16(b)(5), FRCP 26(a)(1)(B), FRCP 26(b)(2)(B), FRCP 26(f)(3), FRCP 33(d), FRCP 34(a), FRCP 34(b), Form 35, FRCP 37(f), FRCP 45(a)(1)(C), FRCP 45(c)(2)(A), FRCP 45(c)(2)(B), FRCP 45(d)(1)(B), FRCP 45(d)(1)(C), and FRCP 45(d)(1)(D).
 
13. See Jacobellis v. Ohio, 379 U.S. 184, 197 (1964) (Stewart, J., concurring).
 
14. See Judicial Conference Committee Report, supra at Rules App. C-74.
 
15.  Proposed FRCP 26(a)(1)(B), FRCP 26(f), FRCP 26(f)(3), FRCP 26(f)(4), FRCP 26(f)(7), and Form 35.
 
16. Proposed FRCP 16(b)(5) and FRCP 16(b)(6).
 
17. See Zubulake I, 217 F.R.D. at 318, 324 (italics in the original). The Zubulake I seven-factor test was augmented by Wiginton v. CB Richard Ellis, Inc., 229 F.R.D. 568, 572-573 (N.D. Ill. 2004) ("…we modify the Zubulake rules by adding a factor that considers the importance of the requested discovery in resolving the issues of the litigation.").
 
18. Compare the "not reasonably accessible because of undue burden or cost" language found in proposed FRCP 26(b)(2)(B) with the "accessed" and "accessible" and "accessible/inaccessible test" and "accessible or inaccessible" and "inaccessible" and "most accessible to least accessible" and "range of accessibility" and "relatively inaccessible" and "typically accessible" and "undue burden or expense" language found in Zubulake I, 217 F.R.D. at 317-320, 324. Compare the "electronically stored information from sources" language found in the proposed FRCP 26(b)(2)(B) with the "media on which it is stored" language found in Zubulake I, 217 F.R.D. at 318.
 
19. See Zubulake I, 217 F.R.D. at 324.
 
20. Proposed FRCP(b)(2)(B) provides: "(B) A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery."
 
21. See Ephraim Schwartz, "Document Management Systems Go to Court New Federal Rules for 2006 Could Come Down Hard on IT," InfoWorld (December 27, 2005), available at www.infoworld.com/article/05/12/27/01OPreality_1.html ("Two proposed amendments to the federal Rules of Civil Procedure, if passed by Congress, will have a major impact on corporations and their IT departments. One expert I spoke with called the situation a legal Chernobyl. *** If you think calling the changes to Rules 26 and 37(f) 'Chernobyl' is a bit of hyperbole, well then, you can always sit back, do nothing, and wait for the fallout.").
 
22. Ronald J. Hedges, View from Another Bench: Zubulake Distinguished — The Impact of the FRCP Amendments on the Holdings in Zubulake, Fios Inc. (March 22, 2006), www.fiosinc.com/events/-webcast_archive.html#.

23. See Judicial Conference Committee Report, supra at Rules App. C-48.

24. See, e.g., Hagemeyer North American, Inc. v. Gateway Data Sciences Corp., 222 F.R.D. 594, 602-603 (E.D. Wis. 2004) ("In short, Zubulake brought the cost-shifting analysis closer to the Rule 26(b)(2) proportionality test…. For these reasons, the Court is persuaded by the reasoning in Zubulake and will adopt the seven-factor Zubulake test."). See also Judicial Conference Committee Report, supra at Rules App. C-49-C-50.

25. See Judicial Conference Committee Report, supra at Rules App. C-49.

26. See Daniel B. Garrie, Matthew J. Armstrong, and William Burdett, Hiding The Inaccessible Truth: Amending The Federal Rules to Accommodate Electronic Discovery, 25 Rev. Litig. 115, 118-119, 123, 125 (2006).

 27. See Ronald J. Hedges, A View From the Bench and the Trenches: A Critical Appraisal of Some Proposed Amendments to the Federal Rules of Civil Procedure, 227 F.R.D. 123, 129 (2005); Id., 227 F.R.D. at 139 (… the interplay of proposed Rules 26(b)(2) and 37(f) will enable corporate entities, in the normal course of business, to shift e-information from being reasonably accessible to inaccessible….").

 28. See id., 227 F.R.D. at 128 ("l Note that discovery might still be allowed under the amendment, but only on a showing of good cause — but hasn't a good cause determination presumably been made under Rule 26(b)(1) if "broader" discovery has been allowed? Are courts simply to engage in a Rule 26(b)(2) analysis, as the Advisory Committee Note suggests? What additional showing of good cause is contemplated?").

 29. See Wiginton, 229 F.R.D. at 572 ("Theoretically, as technology improves, retrieving and searching data will become more standard and less costly…. In the meantime, until the technology advances and e-discovery becomes less expensive, cost will continue to be an issue as parties battle over who will foot the bill.") (citation omitted).

30. Hopson v. Mayor and City Council of Baltimore, 232 F.R.D. 28 (D. Md. 2005) provides a compressive discussion of these issues.
 
31. See proposed FRCP 16(b)(5), FRCP 16(b)(6), FRCP 26(f)(3), FRCP 26(f)(4), and Form 35.
 
32. Proposed FRCP 26(b)(5)(B) provides: "(B) Information Produced. If information is produced in discovery that is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has and may not use or disclose the information until the claim is resolved. A receiving party may promptly present the information to the court under seal for a determination of the claim. If the receiving party disclosed the information before being notified, it must take reasonable steps to retrieve it. The producing party must preserve the information until the claim is resolved."
 
33. See Judicial Conference Committee Report, supra at Rules-Page 27.
 
34. Proposed FRCP 37(f) provides: "(f) Electronically stored information. Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system."
 
35. See Judicial Conference Committee Report, supra at Rules App. C-83.
 
36. See, e.g., Shira A. Scheindlin and Kanchana Wangkeo, "Electronic Discovery Sanctions in the Twenty-First Century," 11 Mich. Telecomm. Tech. L. Rev. 71, 71-72 (2004).
 
37. See Judicial Conference Committee Report, supra at Rules App. C-21.
 
38. Id. at Rules App. C-87.
 
39. See, e.g., Broccoli v. Echostar Communications Corp., 229 F.R.D. 506, 510 (D. Md. 2005) ("A failure to preserve documents and records, once the duty to do so has been triggered, raises the issue of spoliation of evidence."); Mosaid Techs., Inc. v. Samsung Elecs. Co., 348 F. Supp. 2d 332, 339 (D. N.J. 2004) ("The duty to preserve potentially relevant evidence is an affirmative obligation that a party may not shirk. When the duty to preserve is triggered, it cannot be a defense to a spoliation claim that the party inadvertently failed to place a 'litigation hold' or 'off switch' on its document retention policy to stop the destruction of that evidence."); Rambus, Inc. v. Infineon Technologies AG,., 220 F.R.D. 264, 281 (E.D. Vir. 2004) ("Therefore, once a party reasonably anticipates litigation, it has a duty to suspend any routine document purging system that might be in effect and to put in place a litigation hold to ensure the preservation of relevant documents — failure to do so constitutes spoliation.); Zubulake IV, 220 F.R.D. at 218 ("Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a 'litigation hold' to ensure the preservation of relevant documents."); id., 220 F.R.D. at 220 ("UBS argues that the tapes were 'inadvertently recycled….' But to accept UBS's argument would ignore the fact that … UBS had a duty to preserve those tapes. Once the duty to preserve attaches, any destruction of documents is, at a minimum, negligent.").
 
40. See Judicial Conference Committee Report, supra at Rules-Page 34 and Rules App. C-88.
 
41. See, e.g., Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993) ("A federal trial court has the inherent discretionary power to make appropriate evidentiary rulings in response to the destruction or spoliation of relevant evidence. Such power includes the power where appropriate to order the exclusion of certain evidence."); Mosaid Techs., Inc. v. Samsung Elecs. Co., 224 F.R.D. 595, note 3 at 598 (D. N.J. 2004) ("This Court's inherent power to sanction is merely supplemented by the rules and is in no way restricted by sanctions provisions therein."); See also Judicial Conference Committee Report, supra at Rules App. C-87.
 
42. Scheindlin and Wangkeo, supra 11 Mich. Telecomm. Tech. L. Rev. at 78.
 
43. Although the E-Discovery Rule Amendments: (i) conform proposed FRCP 45(d)(1)(D) to proposed FRCP 26(b)(2)(B); (ii) conform proposed FRCP 45(d)(2)(B) to proposed FRCP 26(b)(5); (iii) conform proposed 45(a)(1)(C) to proposed FRCP 34(a); (iv) conform proposed FRCP 45(d)(1)(B); and FRCP 45(d)(1)(C) to proposed FRCP 34(b), there is no such conforming amendment regarding proposed FRCP 37(f).
 
44. Hedges, View from Another Bench: Zubulake Distinguished — The Impact of the FRCP Amendments on the Holdings in Zubulake, supra note 22.
 
45. See Richard Acello, "E-Mail to Lawyers: E-Discovery Rules on the Way," ABA Journal E-Report (October 7, 2005) ("The safe harbor is going to encourage the destruction of data. Insurance companies will insist, in my expectation, on more prompt destruction of data on a more routine basis so that there won't be an issue of good faith.") (quoting Gregory Joseph, former chair of the ABA Litigation Section.).
 
46. See David Glovin, UBS Must Pay Ex Saleswoman $29.3 Min in Sex Bias Case (Update 6), Bloomberg (April 6, 2005).
 
47. Coleman (Parent) Holdings v. Morgan Stanley, Case No: 2003 CA 005045 AJ (Fla.Cir.Ct. 2003).
 
48. See Coleman, 2005 WL 674885 (Fla.Cir.Ct. March 23 2005) (granting in part renewed motion for default judgment).
 
49. See Bo Susan Rosser, "Jury Awards Perelman Additional $850 Million in Damages from Morgan Stanley," Court TV (May 18, 2005), www.courttv.com/trials/-perelman/051805_cty.html.
 
50. Magana v. Hyundai Motor America, et al., Clark County Superior Court, Case No. 00-2-00553-2.
 
51. Magana v. Hyundai Motor America, 123 Wash. App. 306, 319, 94 P.3d 987 (2004).
 
52. The text beginning after note 51 and continuing to this note 52 is based upon various Magana Superior Court pleadings and upon the Draft Transcript of January 20, 2006, Oral Ruling, at 22. (When asked what Hyundai did to find information responsive to plaintiff's discovery requests, Hyundai's in-house counsel testified to the effect that Hyundai "looked at what we had in the legal office, otherwise we would have had to make an extensive computer search.")
 
53. See Magana, Superior Court, Memorandum in Support of Motion for Sanctions Pursuant to CR 37 (December 23, 2005); Michael E. Withey, "Ethical Considerations of Discovery Violations," PowerPoint Presentation (undated).
 
54. Magana, Superior Court, Draft Transcript, supra note 52. Hyundai has filed a notice of appeal.
 
55. Magana, Superior Court, Draft Transcript, supra note 52 at 17, 22-23.
 
56. United States v. Philip Morris, 327 F. Supp. 2d 21 (D.D.C. 2004).
 
57. See In re Disciplinary Proceeding Against Dann, 136 Wash. 2d 67, 960 P.2d 416 (1998) (attorney discipline); Britannia Holdings Limited v. Greer, 127 Wash. App. 926, 113 P.3d 1041(2005) (collections); Go2Net v. C I Host, 115 Wash. App. 73, 60 P.3d 1245 (2003) (contracts); Maison De France v. Mais Oui!, 126 Wash. App. 34, 108 P.3d 787 (2005) (defamation); Davis v. Microsoft, 149 Wash. 2d 521, 70 P.3d 126 (2002) (discrimination); Boring v. Alaska Airlines, 123 Wash. App. 187, 97 P.3d 51 (2004) (employment); Port of Seattle v. Pollution Control Hearings Bd., 151 Wash. 2d 568, 90 P.3d 659 (2004) (environmental); Vallandigham v. Clover Park School Dist. No. 400, 154 Wash. 2d 16, 109 P.3d 805 (2005) (industrial insurance); DOT v. Inland Boatmen's Union, 103 Wash. App. 573, 13 P.3d 663 (2000) (labor); Callfas v. Seattle City of Construction and Land Use, 129 Wash. App. 579, 120 P.3d 110 (2005) (land use); In re Marriage of Griswold, 112 Wash. App. 333, 48 P.3d 1018 (2002) (marital dissolutions); Eugster v. City of Spokane, 110 Wash. App. 212, 39 P.3d 380 (2002) (municipal); In re Parentage of L.B., 121 Wash. App. 460, 89 P.3d 271 (2004) (parentage); Chelius v. Questar Microsystems, 107 Wash. App. 678, 27 P.2d 681 (2001) (wages).
 
58. See Judicial Conference Committee Report, supra at Rules-Page 23 (italics added).
 
59. See Zubulake I, 217 F.R.D. at 317 (italics added).
 
60. See Zubulake V, 229 F.R.D. at 424.
 
61. See Brian Bergstein, Lawsuits Fuel E-Data Storage Industry, Associated Press (March 11, 2006).
 
62. See Arthur Andersen v. United States, 544 U. S. 696 (2005); Kurt Eichenwald, Conspiracy of Fools (Broadway Books 2005); Bethany McLean and Peter Elkind, The Smartest Guys in the Room (Penguin Books 2004).
 
63. See, e.g., Zubulake V, 229 F.R.D. at 424 ("Counsel, in turn, failed to request retained information from one key employee and to give the litigation hold instructions to another. They also failed to adequately communicate with another employee about how she maintained her computer files. Counsel also failed to safeguard backup tapes that might have contained some of the deleted e-mails, and which would have mitigated the damage done by UBS's destruction of those e-mails.").
 
64. See, e.g., Zubulake IV, 220 F.R.D. at 220 ("UBS argues that the tapes were 'inadvertently recycled….' But to accept UBS's argument would ignore the fact that … UBS had a duty to preserve those tapes. Once the duty to preserve attaches, any destruction of documents is, at a minimum, negligent."); Susanne Craig, "How Morgan Stanley Botched a Big Case by Fumbling Emails," Pittsburgh Post-Gazette (May 16, 2005) (In Coleman, 2005 WL 674885, the court severely sanctioned Morgan Stanley for not producing electronically stored information. "In a written statement responding to questions from The Wall Street Journal, Morgan Stanley says all of its recent 'discovery problems' stemmed from honest mistakes, such as computer glitches and misplaced backup tapes, and were not attempts to stonewall adversaries.").